U.S. Size Distribution and the Macroeconomy, 1986-2009

May 8, 2013

The U.S. national income and product accounts are restated in the form of a social accounting matrix or SAM.

Using data from the Congressional Budget Office and the Consumer Expenditure Survey of the Bureau of Labor Statistics, the SAM is extended to include seven household groups in the size distribution of income. Aspects of rising inequality are pointed out, and a simple demand-driven model is set up to examine redistributive policies. The authors find that simulations of macroeconomic policy measures do not markedly affect the distribution of household disposable income. Only policies directed at explicit wage equalization in the form of rising wages at the bottom lead to significantly greater equality.

Authors: Lance Taylor, Armon Rezai, Rishabh Kumar, Laura de Carvalho and Nelson Barbosa
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